Mastercard examines sale of UK payments subsidiary Vocalink, FT reports
Mastercard's Potential Sale of Vocalink: Details and Implications
Background and Rationale for the Sale
July 13 (Reuters) - Mastercard is exploring the sale of a majority stake in its UK payments subsidiary Vocalink back to British banks as it responds to concerns about a critical asset being under U.S. ownership, the Financial Times reported on Monday citing people briefed on the talks.
Role of Vocalink in the UK Payments System
Vocalink is responsible for running much of the UK retail payments system. It designs, builds and operates bank account-based payment systems in Britain, processing over 90% of salaries, more than 70% of household bills and 98% of state benefits, according to its website.
Mastercard's Acquisition of Vocalink
Mastercard bought Vocalink in 2016 for £701 million ($937.38 million) from a consortium of British banks.
Potential Deal Structure and Interested Parties
Estimated Value and Stake
According to the FT report, a deal for a 51 percent stake could be worth about £400 million ($534.88 million).
Potential Buyers
DeliveryCo's Involvement
DeliveryCo, an entity backed by many of the UK’s leading banks and payment companies is believed to be a potential buyer, the report said.
Responses from Involved Parties
Reuters could not immediately verify the report. Mastercard, Vocalink and DeliveryCo did not immediately respond to a Reuters request for comment outside regular business hours.
Regulatory and Market Context
Bank of England's Concerns
The report of stake sale comes amid the Bank of England's growing concerns about the lack of competition for Mastercard and Visa, which handle a majority of British retail payments.
Recent Regulatory Actions
The Bank of England fined Vocalink £11.9 million ($15.92 million) last year for falling short of its obligation to have adequate risk management and governance arrangements.
Additional Information
Exchange Rate
($1 = 0.7476 pounds)
Reporting Credits
(Reporting by Akanksha Khushi in Bengaluru; Editing by Nivedita Bhattacharjee)
